Iraq’s state-owned upstream operator Basra Oil Company (BOC) risks defaulting on payments for the $27bn Gas Growth Integrated Project (GGIP) due to fallout from the US and Israel’s war with Iran.

Phase one of the GGIP is expected to be worth about $10bn and BOC holds a 30% stake in the project, while its partners France’s TotalEnergies and QatarEnergy hold 45% and 25%, respectively.

The consortium formalised the investment agreement with the Iraqi government in September 2021.

As part of the investment agreement, BOC was expected to make payments to fund the development of the project and the money from these payments was expected to come from oil revenues.

Due to disruption to the shipping of oil via the Strait of Hormuz in the wake of the US and Israel’s war on Iran, which started on 28 February, BOC’s revenues from oil have declined significantly, impacting the company’s ability to provide funds for the project.

BOC could default on payments for the project within four to six months if disruption to shipping through the Strait of Hormuz continues, according to industry sources.

BOC has already informed TotalEnergies and QatarEnergy that it is going though liquidity problems because it is unable to export normal volumes of oil, sources said.

When contacted about the project’s financial issues, TotalEnergies referred MEED to comments made by the company’s chief executive Patrick Pouyanne on 29 April.

He said: “We have maintained a team in Iraq, in Basra, of 20 TotalEnergies’ staff, who are supervising the progress of the GGIP projects on the ground, with around 5,000 workers there.”

He added: “This conflict immediately has some impact on TotalEnergies' operations. And we have been, by the way, very transparent, since day one, to disclose all the impacts on our activities.”

TotalEnergies declined to answer questions about potential changes to the schedule for the GGIP and whether there are alternative plans in place that provide for a situation where BOC could not deliver agreed funds.

GGIP masterplan

The GGIP programme is focused on developing four major projects in Iraq.

These are:

• The Common Seawater Supply Project (CSSP)
• The Ratawi gas processing complex
• A 1GW solar power project for Iraq’s electricity ministry
• A field development project at Ratawi, known as the Associated Gas Upstream Project (AGUP)

The CSSP is designed to support oil production in Iraq’s southern oil and gas fields – mainly Zubair, Rumaila, Majnoon, West Qurna and Ratawi – by delivering treated seawater for injection, a method used to boost crude recovery rates and improve long-term reservoir performance.

China Petroleum Engineering & Construction Corporation (CPECC) won a $1.61bn contract in May to execute engineering, procurement and construction (EPC) work for the gas processing complex at the Ratawi field development.

CPECC’s project team based in its Dubai office is performing detailed engineering work on the project.

In August last year, TotalEnergies awarded China Energy Engineering International Group the EPC contract for the 1GW solar project at the Ratawi field. A month later, QatarEnergy signed an agreement with TotalEnergies to acquire a 50% interest in the project.

The 1GW Ratawi solar scheme will be developed in phases, with each phase coming online between 2025 and 2027. It will have the capacity to provide electricity to about 350,000 homes in Iraq’s Basra region.

The project, consisting of 2 million bifacial solar panels mounted on single-axis trackers, will include the design, procurement, construction and commissioning of the photovoltaic power station site and 132kV booster station.

Separately, in June, TotalEnergies awarded China Petroleum Pipeline Engineering an EPC contract worth $294m to build a pipeline as part of a package known as the Ratawi Gas Midstream Pipeline.

Also, TotalEnergies awarded UK-based consultant Wood Group a pair of engineering framework agreements in April 2025, worth a combined $11m, under the GGIP scheme.

The agreements have a three-year term under which Wood will support TotalEnergies in advancing the AGUP.

One of the aims of the AGUP is to debottleneck and upgrade existing facilities to increase production capacity to 120,000 barrels a day of oil on completion of the first phase, according to a statement by Wood.